March 18th, 2016. Ben Lloyd
How Can the UK Housing Crisis be fixed?
You hear the term ‘housing crisis’ being thrown around a lot in politics, and for good reason. In Britain, we need to be building 250,000 new homes every year just to keep up with demands. The problem is that we’re not. In fact, we haven’t come anywhere near this figure in over a decade.
While the nation as a whole is suffering from this crisis, some areas are being hit much worse than others.
So what’s being done about this? Here is a taste of the ideas that are currently being put forward:
Build More Homes
It may sound obvious, and that’s because it is. By buying more land and putting houses there, the crisis is reduced as UK homes are being created. The problem then lies with location, as building houses where there is no demand does not help the areas that are experiencing the crisis the most. Ironically there is a sufficient amount of land available in these areas, but there needs to be key changes made to allow for development on brownfield, greenfield or green belt areas. While there are important reasons for the preservation of these areas, there should be changes to how these sites are protected based on their individual merits rather than simple categorisation.
More Incentives to Build
The UK government have made it very easy for people to buy homes with affordable housing, but they aren’t providing builders with a reason to build them. What is affordable housing? This is a scheme where housing associations build properties that are then provided at a discounted rate to the local property market – essentially replacing council houses. The issue here is that the demand of housing makes even these ‘affordable houses’ expensive due to the lack of supply.
By providing more incentives for housing associations to build more properties, not just affordable housing, the supply can be increased to help balance out the current house prices. Whether these incentives are reduced price for land, bonuses for completing ‘x’ number of houses a year, recognition for the best housing projects or something else entirely is undecided, but it should encourage faster, increased efforts in building.
One of the biggest issues faced by the housing market is the fact that it is all controlled by the centralised government. Local councils have very few tools available to them to allow for increased building in their area. By changing this rule and giving local councils the ability to borrow money in order to purchase land and build their own housing this will not only allow for greater regional flexibility, but it means that homes can be built in the locations where they are needed the most.
Perhaps allowing councils to start building their own homes again to create new council housing that doesn’t lose profit from private property companies would be a good way to ease the housing shortage. If these homes were built for a range of incomes, rather than being a last resort for people who are desperate, then councils could compete with housing associations that are quickly monopolising the market.
Another clever way to resolve the housing crisis is to implement new and innovative developments. For example, building high-rise apartment blocks rather than moving out is a great way to maximise existing room – this is crucial in cities like London. Alternatively, replacing abandoned shops, factories or other disused buildings with small residential developments is a good way of utilising ‘free’ space. Certain developers are also proposing the idea of putting floating homes on the UK’s canal network – in high demand locations like London; this could create around 7,500 new homes.
One method of tackling the housing crisis doesn’t focus on building houses at all. Instead it looks at increasing public transportation in order to unlock areas that are currently not being considered due to difficulty commuting to key areas. While it’s unclear as to how many more homes this would create, the potential of this development is huge.
What are your thoughts on the current housing crisis? Leave us a comment below. And if you’re looking to finance your next big development then call us on 02920 766 565 or request a call back.
Article By Ben Lloyd
March 18th, 2016
Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.
Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.
Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.
Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.See more articles by Ben